Commodities Trading in the UAE
Are you a UAE Trader & Interested in commodities? Have a look at our best offers in Gold and Oil CFDs
Enjoy trading the oldest market and discover energy, agriculture and metals trading.
Why are Commodities Trading in the UAE with ATFX?
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Commodity Market
Commodities are physical raw materials like corn, wheat, oil, and precious metals. Trading in commodities involves buying and selling agreements and contracts for these raw materials.
Commodities are goods that possess intrinsic value and supply consistency and can come from multiple suppliers.
As much as you can physically exchange these goods, a lot of the trading occurs in futures contracts. Traders agree to buy or sell the commodity at a specific price and date.
Commodities trading in UAE is extremely popular, allowing investors to diversify their portfolios and speculate on the future prices of several commodities.
How Commodities Trading in the Uae Works
How Commodities Trading in the UAE Works
Supply & Demand
Trading depends on supply and demand because when there is a limited or low supply, the commodity will increase in price. A sudden increase in supply will cause the commodity’s price to fall sharply. As for the demand, the higher the demand for the product, the higher the price of the product and vice versa.
Derivatives Contracts
Market players must deal with the commodities exchange if they want to trade various commodities and agree on derivative contracts. Derivative contracts are generally agreements or tradeable contracts whose value changes according to the price of an asset rather than owning the asset itself.
- Exchanges
A commodities exchange makes trading in commodities like gold convenient without physically owning them. Some of the most known commodity exchanges include the New York Mercantile Exchange (NYMEX). The Chicago Mercantile Exchange (CME) has the most diverse tradable derivatives for speculation and risk management.
The rise of Internet trading has made Commodities trading in the UAE more accessible. Investors can trade these products online as brokers now started providing all the necessary tools and charts to make it easy for them.
Even though you can opt to purchase the physical commodity and sell it on your own, it is more common to find people trading futures contracts. The contracts have specifications on delivery dates, prices, and quantities, among other rules. Significant manufacturers and large-scale consumers often trade global commodities for risk management to shelter themselves from price fluctuations.
Commodities Trading in UAE Benefits
Risk Management: Significant manufacturers and large-scale consumers often trade global commodities for risk management to shelter themselves from price fluctuations.
Speculation: UAE Traders can profit from predicting price movements without holding the physical commodity.
Diversification: Commodities trading in UAE with atfx offers a way to diversify investment portfolios beyond traditional assets like stocks and bonds.
4 Types of Commodities Investment
1. Investing in Physical Commodities
The most direct way to invest in a commodity is to purchase it physically, which is the oldest form of commodity investment. This approach allows you to sell physical goods at a good bargain whenever you no longer need them. However, this method carries many logistical challenges, such as storage and safe delivery.
Buying gold through a coin dealer is very common. Gold coins and bars available come in different sizes, quality, and rarities. Often, markets with the year of minting and rare coins attract higher prices.
Gold coins are convenient to store and transport as they tend to be small compared to other bulkier commodities such as beef cattle, crude oil, and bags of corn. Therefore, investors should carefully weigh the logistics and storage costs before investing.
2. Investing in Future Contracts
Future contracts provide opportunities to profit from price movements in commodities without physical ownership.
Futures contracts are agreements between a buyer and a seller for a particular product at a specified price on a future date. They are standardized in terms of quantity, quality, and delivery time.
To buy futures contracts, you need to deposit margin requirements into your online ATFX account. These margin requirements are typically smaller than the contract’s actual value, allowing investors to leverage their capital and potentially amplify gains.
3. Investing in Commodity Stocks
This method involves purchasing a stock of companies engaged in extracting, mining, or producing commodities.
For example, purchasing stocks in companies like Glencore (involved in oil, gas, and coal) or AngloGold (focused on gold and platinum) allows investors to gain exposure to the performance of these commodities.
4. Investing in Commodity ETFs & Mutual Funds
ETFs, or exchange-traded funds, are a type of investment fund that trades on a stock exchange like stocks.
Investing in commodity ETFs and diversified commodity mutual funds offers indirect exposure to commodities without physically owning them.
Good examples of these investment funds include the SPDR Gold Trust ETF ($GLD), available on the NYSE. Another example for investors who want to place their bets on oil prices in the United States can choose the Oil Fund ($USO).
Some funds also offer investment opportunities in a cluster of different commodities. The iShares S&P provides a commodity-indexed trust, a fund benchmark containing 24 various commodities in a list of spread-out sectors.
| Type of investment | Order example | Where to get |
|---|---|---|
Physical investment | Gold coins | Physical dealers and Bullion traders |
Futures contracts | Online brokers | Online brokers like ATFX |
Commodity stocks | SINOPEC Shangai Petrochemical Company, Ltd #SHI | Online brokers like ATFX |
ETFs/Mutual Funds | SPDR Gold Trust | Online brokers like ATFX |
Commodities Trading in the UAE: What Does ATFX Offer?
Commodities Broker
When you engage in commodities trading in the UAE, you do not have to deal with all the chaos that traditional floor trading has. You can trade right from your home computer or tablet. The convenience and transparency make it possible to even trade while on the move.
Brokerages are to thank for most of the convenience experienced in recent years. They provide cutting-edge commodity trading platform technologies with the right trading tools for investors. These platforms provide real-time analytics and technical education all from one place.
However, you must find a good trading broker who will offer you the right tools at affordable commissions. State-of-the-art platforms and easy access to them will ensure you can make timely decisions and take advantage of opportunities. Whenever you have a diligent broker, you will get regular correspondence on technical updates to improve your trading experience. For example, you will get emails introducing you to updates on the platform or adding new instruments you may be interested in.
A good commodity trading company ensures you have the proper customer support from its platform, including live chat or social trading. The infrastructure also needs to have minimal lags or slippage.
Commodity Trading in the UAE: Choosing the Right Platform
With so many stakeholders involved in the market, there needs to be one unifying place where they can all interact conveniently. Commodity trading in the UAE is done through software platforms that enable all farmers, producers, investors, and analysts to communicate in one place, all online. Your commodity broker provides a downloadable commodity trading platform where you can trade in a transparent, secure, and controlled environment.
Traders must deal with licensed brokers to ensure they invest with a reliable and accountable entity. Some of the parameters you need to consider when rating a trading platform include:
1. Platform’s Security
A state-of-the-art commodity trading platform should bear the reputation of the financial institution providing it. In other words, if there are a lot of slippages, security breaches and loopholes, it means that the commodity broker is not trustworthy. Aside from being licensed, a broker should also insure the investments you make on their platform. Platform security is an essential aspect of trading because a website needs to meet all the security credentials, such as SSL certification, to ensure that only you can access the platform at any point. It keeps away URL intruders.
2. Convenient Deposit and Withdrawal Options
Making deposits or withdrawing your earnings is important for a commodity trading platform. It will help you make urgent trade decisions without any challenges resulting from cash balance delays. You also get to withdraw your cash and finance your spending as planned.
3. Training and Education
Commodity trading is a high-stakes type of trading. Therefore, you need a platform that lets you place your trades and gives you timely fundamental and analytical information. Information and how fast you can get information can make a big financial difference in commodity trading.
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FAQ
What is Commodities Trading?
Commodities in trading are metals, energy, or agriculture products represented in CFDs. These goods are traded on exchanges in the form of futures or spot trades. Online traders tend to buy or sell these products to make capital gains, as the prices of these products tend to move heavily due to the high demand and supply for them.
How Does Commodities Trading Work
Commodities trading involves buying and selling products on various platforms and exchanges.
Commodities are traded in numerous different exchanges worldwide. In the UK, oil, gas, and other energies are traded at the Commodities Investment Exchange (COMEX) and non-precious metals at the London Metal Exchange (LME). At ATFX, we allow our customers to access the lucrative market and trade commodities all in one place, in the comfort of their own homes.
To make a trade, you need only open an account with ATFX, fund it, and search for a commodity you like. For example, if you are looking for Gold, you can find it in the MT4 or MT5 as XAUUSD.
Decide the amount you want in lot sizes and then execute your trade.
Which Commodity is Best for Trading?
There is no such thing as the “best” commodity to trade. It all depends on you as a trader and how much you follow up with the news and technically analyse any product you like. Nonetheless, there are very famous products in terms of trading volume, and these include Gold, Silver, US & UK Oil, Natural gas and agriculture commodities such as wheat and corn,
There is no one-size-fits-all answer to this question; however, trading in commodities requires researching and applying trading strategies that fit your risk tolerance and understanding how commodities prices move.
How to Invest in Commodities for Beginners?
Here is a quick guide for all new traders.
- You need to understand the basics of commodities. Have a look on this page for more about what commodities are and how you can trade them.
- Choose which type of investment you want to trade, you have 4 option which we provide 3 at ATFX:
- Physical commodities such as gold bar
- Future contracts: such as gold futures or WTI futures.
- Commodity stock: share of assets that are being traded on exchanges such as Glencore or AngloGold
- Commodity ETFs and diversified commodity mutual funds: The SPDR Gold Trust ETF ($GLD), which is available on the NYSE, is a good example of these investment funds.
- Open an account with ATFX: we are SCA licensed, and we have multiple awards
- Research and educate: you need to understand how the market moves and its dynamics and stay informed with the latest news
- Start small: start with a small investment or open a demo account to learn the market
- Diversify: don’t pick one commodity, but instead try to learn and follow up with the latest news of several products. This way, you can reduce trading risk by diversification
- Risk management: apply stop loss, take profit in your trading, and only invest what you can afford.
Continually educate yourself, be patient, and avoid being impulsive in your trades.
Why Get Into Commodities Trading
Commodity trading can be a valuable addition to any investment strategy. Traders or investors tend to seek them out because they are a great hedging tool and good for diversification purposes. Also, commodities are essential to the world economy as there is a continuous demand for raw materials, which makes trading volume high. As such, prices tend to move much more often than other products, making commodities a great tool for speculators.
